“I believe that business has the responsibility to be in service to social, environmental and economic justice - one way to do that is to design equity into the financial systems up front so that they create the space for thrival, not just survival.”

Image: “Stethoscope on Money” by George Hodan is licensed under CC0 Public Domain

The triple bottom line of running a business calls for including “people” and “planet” along with the traditional bottom line, “profit”.

A bit of back story first: I had a deadly, benign, slow-growing brain tumor that manifested symptoms back in late 1986. Dr. Tom Kenefick, MD, long may he wave, is the man who went into my cerebellum in July of 1987 and got it out. He saved my life.

Having medical insurance is what got me to him.

Without that insurance, I’m pretty sure I would be dead. Why? When I didn’t have medical insurance and presented to three different doctors in early 1987 with excruciating symptoms, they each dismissed me. “It’s all in your head,” said one. He was right, but not in the way he thought.

I’m still here because I finally did get medical insurance when I got a job with a big bank in June 1987. “Wait, what?” I can hear you wondering. “How’d she get a job when she was dying from an undiagnosed brain tumor?” Divine intervention. Seriously. And that’s a much longer story which I’m happy to go into at a later date.

Now this is where the term “pre-existing condition” comes in. I had just acquired one.

As long as I was an employee and worked for a company that provided medical insurance, I could get medical insurance. That’s because, then as now (and who knows for how much longer, but that’s another story), insurance companies could not exclude people with pre-existing conditions in group insurance plans. And could not charge them more for that coverage.

While the Patient Protection and Affordable Care Act—also known as the ACA, also known as Obama care, which went into effect January 1, 2014— mandates that insurers must cover all applicants regardless of pre-existing conditions and must charge them the same rates, that is not the reality on the ground.

Which brings me to my point here today.

The best option today still remains medical coverage tied to employment.

And here’s how your small business can get group coverage. It’s because of the rules around what constitutes a “group.”

And that’s just 2 or more full-time employees. And because one of those employees is the owner, all you need is one more employee and, voila! Your company is eligible for group insurance plans.

My response: There are costs and there are investments. Providing medical benefits is an investment in yourself and your employees.

There are ways to mitigate the cost. The lowest hanging fruit here is to have your employee pay all or part of the premium. Plus, you have many different plans to choose from, with different premiums and deductibles. That’s how to lessen the cost.

But that’s not the whole impact of providing medical insurance. You are more likely to be really clear about what you want in an employee before you hire that person, and you are more likely to vet that person. So this improves your bottom line by hiring smart the first time.

Also, an employee with benefits is more likely to stay with you, thereby increasing your bottom line. This is for three reasons: by not incurring costs associated with employee turnover, by increasing value inside the company with institutional memory, and by having employees that stay healthy, they are more productive.

So here’s the dealyo if you’ve got a small, owner-run business:

Get yourself on payroll,

Hire one other person and put them on payroll.

Get a group coverage program.

Have the employee pay up to 100% of the premium.

This is how you satisfy the “people” part of the triple bottom line, as well as the “profit” part.

Want some help figuring out exactly what your options are and how you can get this done? I can help you figure out how to design more equity into your business. Set up a Financial Clarity Call with me and we’ll nail this down.

Image: “Dollar Banknotes and Judge’s Gavel” by George Hodan is licensed under CC0 Public Domain

The whole idea behind my consulting practice, Equity By Design, is that business has the responsibility to be in service to justice: social, environmental and economic justice.

Money touches every part of a business. Every part.

How you make your money and how you spend your money reveals your character and your values.

Who your customers are and who your vendors are sheds light.

How much you pay your employees and what benefits you do or don’t provide.

How you do what you do.

This all paints a picture and makes your priorities transparent.

Tracking the path of money shows what you value. When you’re ready to explore how to design your business to reflect the triple bottom line of people, planet and profits, set up a complimentary Financial Clarity Call with me and I’ll show you how to design equity into your business.

I will not take the same tack my German grandparents did in Hamburg, Germany during the rise of Hitler and the takeover by the Nazis. My Oma and Opa kept their heads down and their mouths shut.

They were the “right” kind of German: Aryan, white, blue-eyed, Lutheran, native-born, German speaking, hard working, compliant, heterosexual, married with two young children. One of them my father.

They made it through, but not unscathed.

So many people didn’t want to believe that Hitler was a threat; they thought that Germans loved democracy so much that Nazism couldn’t really take hold. And they paid for that denial with their lives.

Trump is dangerous. He is a threat. He has unleashed the white supremacists.

His speech and choice of words grants license to the torch-bearing. He has gone from using a dog whistle to a bull horn.

Will we have a presidential election in 2020? Will they be suspended or will we have sham elections?

Will “The Handmaid’s Tale” go from speculative fiction to documentary? I don’t know.

What I do know is that I can no longer keep my head down and my mouth shut.

This country was built on the backs of Native and African peoples. They were tortured and terrorized into compliance. Native peoples were legally exterminated. African peoples were legally enslaved. The inter-generational trauma affects us all. All of us. To. this. day.

I pledge to do what I can, to put my faith into action, to heal myself and to be a voice for healing.

In order for a president to be impeached, a resolution for impeachment must pass the House by a simple majority. In and of itself, that’s a steep hurdle, especially when the president’s own party has control, as Republicans do now.

But in order to actually be removed from office, a president must be convicted by a two-thirds majority in the Senate — something that has never happened before.

William Hagen is the “Grand Dragon,” or state leader, of the Loyal White Knights faction of the Klan in California, according to Carla Hill, an investigative researcher with the Anti-Defamation League’s Center on Extremism, which tracks members of hate groups.

Every since I founded Equity By Design in 2011, I have been guided by this core principle: “I believe that business has the responsibility to be in service to social, environmental and economic justice – one way to do that is to design equity into the financial systems up front so that they create the space for thrival, not just survival.”

Take a look at the chart mentioned above. See who resigned. See who didn’t.

Make decisions about how you are going to spend your consumer dollar. Invest your retirement funds in companies that support diversity and take a vocal stand against neo-Nazis, white supremacists, and the KKK.

Do you want to design equity into your financial systems? Schedule a free Financial Clarity Call today and let’s get a conversation started about how to make that happen. I can support and guide you to incorporating your values into your business, to put your money where your mouth is.

This is a follow-up to last week’s post about my customer experience with the Salvation Army. Yes, customer experience. They may be a non-profit, but they are big business ($2.9 billion in revenues in 2015) and they rely on donors for their success.

What’s the negative impact to the Salvation Army because of my disappointment? It’s a double whammy: lost revenue and added expenses.

Here’s what that screw-up cost them from the revenue side:

I will never call them again to donate furniture = definite lost revenue

I am telling everyone I know about how they screwed up = potential lost revenue

I will not donate money to them = lost short-term revenue

I will not consider them in any legacy planning I do = lost long-term revenue

Hard, but not impossible, to put a dollar value on that. Here’s a stab at it:

According to the Salvation Army website,

10 million people donated in-kind donations this past year.

The value of that in 2015 was close to $565 million.

So an average annual donation of in-kind gifts brings in approximately $56.50 to the SA.

If 10 people that I tell about my experience don’t donate again, that’s another loss of $565 per year.

And that’s just for one year. Multiply that over my and my friends donating lifetime and it gets up there.

Here’s what it costs them from the added expenses side:

training costs for the new hire when the employee gets fired or quits,

loss of productivity during the training process,

loss of productivity during the first 6-12 months of the new person’s employment due to the newbie getting up to speed,

unemployment compensation insurance rates go up the more people claim unemployment.

Money touches every part of your business. CFO services don’t just include review and approval of the bookkeeper’s work, consultation with the CPA for the best tax advice, or communicating key performance indicators and metrics to the owner. That’s just the beginning. Financial operations management is so much more

Because what gets tracked gets noticed and acted upon, I quantify the hidden costs of doing business, so the owner can make better decisions about policies and procedures.

There are financial ramifications to all this, and I’m gonna talk about them in this coming Wednesday post. Treating people well is not just the right thing to do, it actually has measurable ROI.

Thanks for being part of my tribe. Consciously designing equity and fairness into the fabric of your business is how you do well by doing good. Hit me up for a free Financial Clarity Call to see how we can do this together.

Today was the day that the Salvation Army was coming to pick up a bunch of my mom’s furniture. I inherited her stuff, all her stuff, when she died last year. I understand now why many traditional cultures have a period of mourning, at least a year. Took me that long to get out of grief brain and make decisions about what to keep and what to let go of. I had been waiting for this day since I scheduled the pickup at the end of June.

Called their automated line at 7.30am this morning to find out what my 3-hour window was gonna be: 8-11am.

Fantastic.

Noon rolled around and still no truck. I called, got in the queue to talk to Customer Service, found out there were 22 people ahead of me; I hung up and called back later.

Got a lovely woman (after she talked to the five people ahead of me.) “Oh, we don’t pick up in Bonny Doon.” (rural region up narrow winding roads in the Santa Cruz mountains in California.)

Three deep breaths while I experienced an immediate surge of anger and let it pass on through.

“I specifically told the gal I made this appointment with back on June 26th that I lived in Bonny Doon and I asked her specifically if they came up this far because not many charities will and she said,’ no problem’.”

The very nice woman today repeated, “I’m sorry, but we don’t service that area.”

Three more deep breaths.

“May I speak with your supervisor, please?” I asked.

Jennifer, her supervisor, came on the phone after a long bit, and I explained it all to her. She said she’d have to listen to the tape of that June call and get back to me in 1/2 an hour, one hour tops.

She did.

Now here’s the point of this whole story. Her response.

“It clearly wasn’t handled properly. I will write this up and submit it to her supervisor and it’ll go into her permanent record and she will be reprimanded. She clearly didn’t respond to the prompts from the system to ask you where in the 95060 zip code you are because we don’t go above the university (UC Santa Cruz). And I’m sorry, but I can’t reschedule this.”

Yes, the employee messed up. But it’s not only and all her fault, just like it’s not all a student’s fault 100% if they don’t get a new concept.

And really, fault is not a helpful word here. A screw up is feedback. Feedback that something in they system isn’t working. It’s information.

In this case, management had also messed up. The employee hadn’t been properly or sufficiently trained. Reprimanding an employee and putting demerits in their personnel file is not managing. Not only is punitive and humiliating, it just doesn’t work.

People will mess up. That’s a given. Instead of looking for blame, look with curiosity. Why did it happen? And what can management do to support the employee so that this doesn’t happen again? What can we learn from this situation to improve our employee’s effectiveness AND our customers’ experience?

Don’t get me wrong, I’m not talking about coddling or never firing an employee. I am talking about accountability. Use the feedback to make the necessary tweeks, and hold everyone accountable: the employee AND the manager. Sometimes firing someone or reassigning them is the right thing to do.

Financial operations management is not all about number crunching and spreadsheets and financial ratios; it’s also about identifying those areas of your business that impact your clients and seeing if there are procedures in place that are not helping you retain your clients, or worse still, sending them away with nothing but bad things to say about you. Because money touches every part of your business, my job as a virtual CFO is to look at every part of the business and suggest improvements.

Ready to take a candid look at your business practices with an eye to doubling your profits? Schedule a free Financial Clarity Call with me and let’s see about getting this done for you.

Sometimes it’s helpful when you’re trying to figure out what something is to define first what it isn’t.

What are CFO services exactly? What is financial operations management? What exactly is it that you do Monique?

Here’s what I don’t do.

I’m not a bookkeeper. They keep the books. They track and record the day-to-day transactions in QuickBooks or Zero or some such accounting software. They make sure the bills get paid and the customers pay up. As a virtual CFO, I use the financial statements that bookkeepers produce to analyze past performance and provide assumptions for future planning.

I’m not a CPA (Certified Public Accountant) or an EA (Enrolled Agent). These folks are tax preparers and know how to produce income tax returns and to give tax advice. I shudder to think of the continuing education CPAs and EAs need to go through to stay on top of the IRS and its changing regulations. I work with tax professionals to structure the business to the owners best advantage.

I’m not a financial planner. Those folks are great for giving you advice on what to do with the money–that I help you make–that you want to invest for your retirement, kids college and such. I help the business owner make the money to invest in their future.

I’m not a business coach. They provides positive support, feedback and advice to improve personal effectiveness in the business setting, according to Wikipedia. I work with business coaches to help the business owner move forward.

I’m not a financial therapist. Bari Tessler, financial therapist par excellance says: “I describe this work as integrating deep psychotherapeutic training with practical skills, tools, and financial training.” I work with financial therapists to support the business owner put the insights they gain into practice.

If you think of all these different roles as being players in an orchestra, then I am the conductor. These different roles are all connected to each other and the business owner. If they aren’t overseen and synced, then the left hand doesn’t know what the right hand is doing. Some functions can get done twice and others not at all.

Financial operations management and CFO services makes sure that the books are being kept in a format that provides the owner with information on which to base decisions, and gives the tax preparer accurate information to file the tax returns and give advice. It means preparing budgets and forecasts and business plans. It means securing loans and line of equity from banks. It means helping struggling companies turn themselves around.

Money flows to every part of your business. Every part. And having a virtual CFO on your team ensures that the entire picture is being looked after. Seen and overseen and responded to.

If you feel like it’s impossible to hit the mark when it comes to your financial operations, then it’s time to make some changes. It’s not impossible, it just requires a thoughtful, customized approach. That’s where I come in.

Equity By Design offers you expertise equal to a full time CFO at a fraction of the cost. Let’s have a chat about how I can turn your business around, even out your cash flow, and double your profits. Guaranteed.

And which type of investor you will be pitching your company to depends on your exit strategy.

If you’re looking to sell your company lock, stock and barrel, that’s one type of exit. This could be a sale to your kids because you want to keep the business in the family, to another company who wants to expand their market share, or to an individual who wants to buy a mature, proven business.

If you’re looking to “go public” in an IPO (initial public offering), that’s another. This is where angel investors and venture capitalists come in. These guys, and they are mostly guys, are accredited investors–high rollers looking to gamble and win big.

And if you’re not looking to go public but want long-term investors to grow, that’s yet another. DPOs, or direct public offerings, involve unaccredited investors who are aligned with the mission of the company, kinda like crowdfunding but different.

The good news is that no matter what type of investor you’re engaging with, or what your exit strategy, as I mentioned in last week’s post, getting “investor ready” involves the same elements:

Good financial records.

Complete business plan.

Financial projections.

Solid management team.

Whether you are pitching to an angel, a VC, a family member, or a buyer, it pays to know what all they are looking for. Because different types of investors are focused on different aspects. The bank is interested in past performance and collateral. An investor is interested in the future and who you are: the jockey, not the horse. Both are interested in past and future; however, each places their emphasis on different parts of the picture.

Your CFO can prepare the information they want in the way they expect to see it. Investors want to see the numbers, and they want to see how you are going to reach those numbers. They want to see how they are going to get a big return on their money. And it gives investors comfort to know that you are working with a financial professional; it demonstrates to them that you know enough of what you don’t know to get the right support.

They want to see your financial history, so this means you have to have up-t0-date financial records.

They want to see your written plan on how you expect to get where you want to go, so this means you have to have a business plan that details every aspect of how you run your company: marketing, management team, financial projections, and production.

No matter what your exit strategy, working with a CFO is essential to your business health and growth. What to know more about how CFO services might help your business? Take the first step and schedule a time to talk with me about how I can help you get your business “investor ready.”

I’m guessing that if you’re interested in getting your company “investor ready” it’s because you are looking for outside cash.

There are many reasons a viable company needs outside cash:

You need to purchase equipment to expand your business.

Your business is profitable, but you need to even out periodic negative cash flow.

You want to sell the company.

You want to attract top-notch key employees.

You’re a start up and need to raise capital.

While these reasons are different, they all have one thing in common: your company needs something from the outside. It’s your job, with the help of your CFO, to provide those potential sources of cash with the information they need in the way that they want it. You have to show them that you know what you’re doing. It helps to talk their language.

What you need to have in place to call yourself “investor ready:”

a solid finance and accounting team

full charge bookkeeper to handle the day-to-day operations and record-keeping in a complete, accurate and timely way

a tax preparer (CPA or EA) to file accurate tax returns in a timely fashion and to give you tax advice

a CFO to oversee all the financial operations and coordinate between the bookkeeper, the CPA/EA, you, and the bank or investors

documented business processes in the form of an Operations Manual

job descriptions

processes

procedures

a solid accounting system

pick a system you can grow into so that you have your financial and accounting history in one system.

a vision for the future, i.e., business plan

Marketing plan

Financial projections

income and payroll taxes filed on time

current, complete, and accurate financial reports

key management positions filled with experienced people, either as staff or consultants.

In fact, these best practices apply to all businesses, no matter what their exit strategy, how long they’ve been in business, or how many employees they have. However, not all business put in the effort to put these in place. That’s why some businesses fail in the first five years, some struggle, and some fail to thrive. But if your business wants to grow and needs cash from an external source, then these are essential for success.

There are two ways to get the cash you need to scale your business: debt or equity.

Debt financing: This is about borrowing money and repaying it with interest.

Equity financing: This is about selling shares of your business, thereby cutting investors in on the ownership of the business, and sharing the profits.

There are pros and cons to each. What it all comes down to is what’s the best deal you can negotiate at the time you need the money and with whom. As the fabulous Annie Savoy said in Bull Durham, “…it’s all a question of quantum physics, molecular attraction, and timin’.”

Types of investors:

Friends & family

Partners

Banks and credit unions

Angel investors & venture capitalists

Philanthropic foundations

Community investment funds

Accelerators & incubators

Let’s talk here about #3, banks and credit unions. I’ll cover the others later in other posts.

Banks, where your debt financing will come from, are more risk-averse than investors. And they rely more on your history of past performance and what assets you have to put up as collateral. This is also cheaper money than compared with what you’d get from an angel or VC; those types of investors want an ownership interest and a large return on their money. This is a good solution when you have collateral and a profitable business.

Banks want collateral up the wazoo. And if you don’t have collateral in the business, like equipment or real estate, they want a personal guarantee from the owner(s) using their personal assets, like the house.

Banks and credit unions are the best source of cash when you have collateral. Investors serve a different purpose and I’ll talk about them next week.

What your CFO does is provide the financial information the bank needs in the format the bank wants it in. For starters, they will want to see your tax returns and financial statements for the prior 2-3 years, budget and cash flow projections for the next 2-3 years, and a bunch of other supporting data (previous job history, personal assets, spouse’s income and assets, etc.)

In order for you to provide them with your tax returns, you have to have filed them, which means you have to have prepared them, which means you have to have an accounting system in place and a bookkeeper to have tracked the data. Your CFO is the best person to coordinate and direct this process.

When you’re looking to get your business “investor ready” I can help. Got questions? Pop ’em into the comments below and we’ll get ‘her done! And remember: there are no stupid questions. Never.

You’ll never find a company with positive cash flow and profitability in bankruptcy court.

Just won’t happen.

Let’s start with profitability. Whatever it is that you are selling, you have to be selling it for a/ more than what it costs to make and b/ more than what your overhead is. In other words, you have to have a bottom line that is in the black.

If you don’t, then that’s the first thing to fix by some combination of:

raising your prices

lowering your costs

increasing your sales volume.

There are two major break points in your business model: the gross profit (your sales minus your costs of goods) and the net profit (the gross profit minus the overhead expenses.)

The gross profit has to be in the black, otherwise you’re not in business but running a charity. And your gross profit has to be enough to cover your overhead expenses to get you to a net profit that also has to be in the black.

So say you are profitable, but you find yourself in a negative cash flow situation from time to time. Let’s look at some possible reasons for this happening and what the fixes are:

You manufacture a product or provide a service that require costs that you have to cover before you get paid by your customers.

This is the easiest fix of all. Get some financing from a bank or from investors. More on what all you need to get “investor ready” in next week’s blog post.

You have customers that are slow payers, so you’re making the sales, but the cash is slow in coming in.

get deposits from your customers

get serious about collections.

You have a seasonal business and most of your cash comes in all at once.

set aside a reserve account to carry you over the dry months.

defer expenses and capital expenditures into months more flush with cash.

You show a profit on paper, on your Profit & Loss, but you’re making lease payments on equipment or financing a line of credit.

this is a marketing fix…you just have to get more sales volume, either more customers or sell more to the customers you have.

When it comes to maintaining a sustainable business, there are two things you need to have in place: profitability and cash flow.

When you’re wanting to increase your profits and balance out your cash flow, I can help you get there. It’s just a question of honing in on the particular area specific to your situation and applying the appropriate remedy.

Would love to hear about your current challenges in the comments below.